Court Reduces Lead Smelter Injury Judgment

A Missouri appeals court has reduced a $358 million judgment that had been returned for 16 people who breathed toxic emissions from a lead smelter as children and suffered cognitive harm. While this relieved Fluor Corp. of $240 million in punitive damages, the court affirmed the landmark verdict. In its opinion, the Missouri Court of Appeals struck Fluor’s portion of the $320 million punitive damages award, saying it had been based on a flawed theory of “domination” over its corporate partners on a Herculaneum, Mo.-based smelter.

But Fluor was still found liable for punitive damages, with the amount to be redetermined in the trial court. The balance of the judgment survived, with the appeals court affirming $38 million in compensatory damages for the 16 Plaintiffs, who were born between 1984 and 2000 and later tested for abnormally high levels of lead. They suffered low IQs, attention deficit hyperactivity disorder and other cognitive impairments as a result, the opinion said.

The three-judge panel also upheld punitive awards of $48 million against A.T. Massey Coal Co. and $32 million against Doe Run Investment Holding Corp., which co-owned the plant for certain periods along with Fluor between 1986 to 1994. The appeals court spoke in harsh terms throughout the opinion, sharply criticizing the co-owners’ “highly reprehensible” conduct in failing to curb the plant’s toxicity and misleading residents and regulators about the danger.

The panel found that the partnership willfully pumped out levels of emissions that violated federal standards while knowing that nearby children were exhibiting extremely high levels of lead in their blood, taking only “token” remediation measures and deflecting blame to the victims’ parents. The landmark verdict followed a lengthy trial in 2011. The opinion said:

In short, the defendants placed their ability to turn a profit above the well-being of children. We are neither offended nor surprised by the jury’s conclusion. The jury could rightly find such actions outrageous.

The Plaintiffs asserted claims against the three partners separately, seeking to hold each liable based on its conduct during its ownership of the plant. They also sued Fluor under an additional theory of “domination,” claiming it exercised pervasive control over its subsidiaries that were part of the ownership structure. The appeals court vacated the punitive damages against Fluor on the grounds that the claim was based on an improper application of agency law surrounding Fluor’s parent-subsidiary relationship with two subsidiaries, DRHI and Leadco. The appeals court wrote:

The children here sought to hold Fluor liable under traditional agency principles merely because of its domination of and control of its subsidiaries. This is insufficient. Therefore, we hold that a principal-agent relationship was not established, and thus the parent company, Fluor, cannot be held liable for the actions of its subsidiaries under an agency theory purely on the basis of domination and control.

The panel rejected several challenges to the trial proceedings, upholding the lower court’s handling of expert testimony and jury instructions. The appeals court also affirmed that the sizable punitive awards did not violate the Defendants’ due process rights. The Plaintiffs are represented by Newman Bronson & Wallis, the Law Offices of James R. Dowd and the Smoger Law Firm. Thus far they have done a very good job in this case.